Earlier update appeared to be downloaded succesfully, but trying to install it gave: "Sailfish OS couldn't be updated, try again later. Device will now reboot".

Now, after I've done

rm /home/nemo/.cache/store-client/os-info
pkill store-client

and booted the device (both several times), I cannot even download the update anymore. The device tries to download the update, but progress indicator does not move forward and after 10+ seconds it says update failed.

At this point ssu re printed Device release is currently: 1.1.2.16. My device information page says current version is 1.1.1.27 so I did ssu re 1.1.1.27 and tried to update again, still fails to download.

EDIT: Before anyone asks, I've triple checked the obvious: The device is connected to the internet. Tried to download the update both over WiFi and mobile data.

@xfade, yesterday removed the account and added it again. Tried to download update, no luck. Tried again in the evening (without logging out), download starts, downloads little bit (~1/6) at normal speed, then suddenly jumps to being "complete" suspiciously fast. I try updating. Update progresses to about 1/6, then "Sailfish OS couldn't be updated, try again later. Device will now reboot".

After some time the device goes completely dark and does not respond to anything. After waiting a couple of minutes I removed battery (which I prolly shouldn't have). Currently in bootloop. Trying recovery mode next. Good thing I have automatic daily full filesystem backups.

I suspect the actual problem causing this had nothing to do with any specific package I had installed. Instead, my phone was suffering from a btrfs allocation problem. Especially after the manual upgrade, my phone started having various strange stability problems, which soon escalated into more and more severe ones. In the end all my accounts stopped working, messages could not be received, most apps crashed right after starting...

I was able to resolve this by carrying out the btrfs balance operation as described by @Manatus in the article linked above.